I-3 - Taxation Act

Section 418.1.2 Disposition versions

2006-03-01

418.1.2. A taxpayer’s foreign resource expense, in relation to a country other than Canada, does not however include

(a)  an expenditure that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class;

(b)  an expenditure incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to evaluate the feasibility of a method of recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates;

(c)  an expenditure, other than a drilling expense, incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to assist in the recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates;

(d)  an expenditure incurred in relation to the injection of any substance to assist in the recovery of petroleum, natural gas or related hydrocarbons from a natural reservoir;

(e)  an expenditure incurred by the taxpayer, unless the expenditure was made

i.  for the purpose of enabling the taxpayer to acquire foreign resource property,

ii.  for the purpose of enhancing the value of foreign resource property that the taxpayer owned at the time the expenditure was incurred or that the taxpayer had a reasonable expectation of owning after that time, or

iii.  for the purpose of assisting the taxpayer in evaluating whether a foreign resource property is to be acquired by the taxpayer;

(f)  the taxpayer’s share of any expenditure or cost described in any of paragraphs a to e that is incurred by a partnership; or

(g)  an expenditure incurred by the taxpayer in a taxation year of the taxpayer that begins before 1 January 2001.

2004, c. 8, s. 79; 2005, c. 38, s. 77.